David Lozano’s first experience as a grantmaker was a powerful one. As part of a shared gifting circle—a grantmaking approach that allows nonprofit leaders to award grant dollars to other nonprofit organizations—he and six other nonprofit leaders received $8,000 grants to distribute to one or more local creative organizations in Dallas. Lozano, executive artistic director of Cara Mía Theatre Co., gave the majority of his funds to Trans.lation, a tiny nonprofit that supports immigrants through the arts. Both grantmaker and grantee had strong emotional reactions. Carol Zou, leader of Trans.lation, did not expect to receive so much money and was deeply moved by his generosity. And for the first time in his life, Lozano was able to challenge a system that he believes overlooks people of color when it comes to decisions affecting arts funding.

Shared gifting circles like this one, which we conducted in partnership with The Embrey Family Foundation, are novel because they shift funding power to nonprofits. A funder invites 6 to 12 local nonprofits to spend a day as grantmakers. Typically, each participant receives about $10,000, keeping $2,000 for their own organization, and distributing the remaining $8,000 to another organization or organizations of their choice.

The process unfolds like this: The shared gifting circle sponsor collects proposals and shares them with the participants a few weeks prior to the circle meeting. During the meeting, participants spend 90 minutes discussing each organization’s proposal, asking questions, and offering suggestions and resources. After the proposal review, participants make their funding distribution decisions and explain their choices aloud to the group. Participants then have another hour or so to reallocate funds among themselves if they choose. Sometimes groups decide to put funds aside for projects that have emerged over the course of the day, collective group training, or other purposes. At the close of the day, the group agrees on how they want to report back to each other about use of the funds.

Restoring the values of gift giving to grantmaking

In truth, grantmaking often looks more like an investment or a transaction than a gift. Grantees have to come up with a proposal that aligns with a foundation’s criteria or focus areas (not necessarily with the organizations’ core mission), and promise results based on the amount they receive, almost as if the foundation were purchasing their services. And as others have pointed out, grant reporting frameworks often are burdensome for grantees, and while they may track the outcomes the foundation aims to measure, they don’t always track the ones grantees hope to measure. The values inherent in giving—such as trust, deepened relationships, and letting go of control—can get lost in the process.

Elise O. Casper, a philanthropist from Wisconsin who had a deep interest philosopher Rudolf Steiner’s work, first conceived of shared gifting and thereafter created the Mid-States Shared Gifting Program, which in 1985 began using the model with Waldorf Schools. Over the years, we have observed how shared gifting creates value from the very process of giving money away. In particular, it fosters innovation, supports collaboration, and stimulates learning.

Fostering innovation

One reason Lozano decided to give most of his funding to Trans.lation is that he knew the organization would struggle to raise funds elsewhere. In his experience, foundations opt for safe, well-established organizations that they view as low-risk investments. Smaller organizations and those pursuing novel, untested projects tend to receive smaller amounts or simply can’t get funding, often leaving organizations that serve marginalized, harder-to-reach communities with less support. This tendency also stifles innovation, because nonprofits that want to try something new seldom get the money to do so.

Shared gifting circles restore focus on a point that’s often lost in contemporary grantmaking: Money given as a gift should not always have to deliver guaranteed results; there’s huge value simply in discovering whether a new approach has promise.

Supporting collaboration

One of the most exciting outcomes I see on a regular basis is collaboration. As nonprofits discuss their work with each other, there’s usually an “a-ha” moment when organizations see specific ways they could deliver more value if they worked together. A few examples come from a circle we ran with food and agriculture organizations in the Pacific Northwest. When two local farmers markets found out they were both invited to the circle, they decided to submit a proposal for a joint project. That led to the creation of an umbrella organization, the Skagit County Farmers Market Coalition, for all the farmers markets in the area.

Two other organizations found ways to collaborate after the circle. Viva Farms, a bilingual farm incubator, and Community Action of Skagit County, a social services provider, found that by joining forces, they could improve access to healthy food for low-income residents while providing more customers for new farmers. They partnered to create the Fresh Fridays Farm Stand, where Viva farmers sold produce and Community Action provided information on resources available to pay for local food and how to learn how to prepare fresh produce. “For me, the community aspect was really powerful—having the opportunity to see all of these programs within our region and to think about how we can spread the resources that we have amongst our peers,” said Ethan Schaffer of Viva Farms. “It was a very different way of thinking about our organizations, how they relate to each other, and how we are all funded. It made us think more about what our priorities are as a community.”

Stimulating learning

Often a shared gifting circle is a nonprofit leader’s first experience with giving funds away. Reading others’ proposals with the eye of a donor gives them a whole new perspective on the fundraising process. The chance to discuss their proposals can also yield useful insights. In one shared gifting circle, a man decided to give a smaller portion of his funds to two organizations that he felt, given their stage and size, should have had a strategic plan in place. To the organizations involved, this feedback was as valuable as a financial gift and it was well received because it came from a peer.

Using shared gifting at Stanford

Interest in shared gifting is growing. In the past, I received about five calls a year regarding the shared gifting model. This year, I’ve received two or three calls a month from people who want to implement it—so many that we published an online tool kit to help people get started.

We are also working with the Kozmetsky Global Collaboratory, which is conducting research on facilitating conversations among investors, entrepreneurs, and consumers to create new economic thinking. The idea is to move beyond considering only financial returns to an understanding of how investments and expectations about returns influence solutions to climate change. Researchers Syed Shariq, Neeraj Sonalkar, and Thomas George want to understand how the shared gifting process creates shared value among participants, and how that shared value can help investors and entrepreneurs work together to form new enterprises aimed at neutralizing or reversing climate change. Their students and collaborators will experiment with using components of the shared gifting model and expanding its scope.

Shared gifting circles offer a new lens through which we can view philanthropy. They challenge traditional power dynamics, and demonstrate how the act of giving a gift can transform relationships and create new value through the process of giving it away.

Kelley Buhles is senior director of philanthropic services and organizational culture at RSF Social Finance (@RSFSocFinance), an innovative lending, giving, and investing organization based in San Francisco.

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